Oregon Pacific Bancorp Announces Second Quarter 2024 Earnings Results

Rhea-AI Summary

Oregon Pacific Bancorp (ORPB) reported strong financial results for Q2 2024. Key highlights include:

- Net income of $1.9 million ($0.26 per diluted share), up from $1.6 million in Q1 2024
- Net interest margin expanded to 3.65%
- Loan growth of $12.1 million (8.80% annualized)
- Period-end loans totaled $563 million
- Deposits totaled $677.5 million
- Noninterest income grew to $2.0 million

The bank saw improvements in core earnings, asset yields, and trust fee income. However, there was an increase in classified assets and a slight rise in the cost of funds.

Positive

• Net income increased to $1.9 million ($0.26 per diluted share) from $1.6 million in Q1 2024
• Net interest margin expanded to 3.65% from 3.59% in Q1 2024
• Loan growth of $12.1 million, representing 8.80% annualized growth
• Loan yield increased to 5.43%, up 0.13% from the previous quarter
• Noninterest income grew by $171,000 to $2.0 million
• Trust fee income increased by $37,000 due to growth in Assets Under Management

Negative

• Increase in classified assets of $2 million due to downgrade of one commercial and industrial lending relationship
• Quarterly deposit contraction of $18.0 million
• Cost of funds increased to 1.30% from 1.20% in Q1 2024
• Provision for credit losses of $141,000 recorded in Q2 2024

FLORENCE, Ore.--(BUSINESS WIRE)-- Oregon Pacific Bancorp (ORPB), the holding company of Oregon Pacific Bank, today reported financial results for the second quarter ended, June 30, 2024.

Highlights:

• Second quarter net income of $1.9 million; $0.26 per diluted share.
• Quarterly tax equivalent net interest margin of 3.65%.
• Quarterly cost of funds of 1.30%.
• Quarterly loan growth of $12.1 million or 8.80% annualized.

Net income for the quarter ended June 30, 2024, was $1.9 million, or $0.26 per diluted share compared to $1.6 million or $0.22 per diluted share for the quarter ended March 31, 2024. “We are pleased with the growth in our core earnings,” said Ron Green, President and Chief Executive Officer. “Expansion of our net interest margin coupled with growth in noninterest income centered around our trust, Oregon Pacific Wealth Management investment advisory services and mortgage income continue to trend positively. We remain uniquely positioned to offer these additional services and are optimistic about future opportunities for the Bank to attract clients who desire the traditional community banking model.”

During the quarter the Bank’s net interest margin expanded to 3.65%, up from 3.59% in the first quarter. The expansion was primarily driven by an increase in the asset yields, which grew from 4.88% in the first quarter of 2024 to 5.03% in the second quarter of 2024. This occurred in part due to the shift in asset mix as investment securities matured and shifted into higher yielding loans and fed funds, with that increase more than offsetting the growth in the cost of interest-bearing liabilities.

Period-end loans, net of deferred loan origination fees, totaled $563 million, representing quarterly growth of $12.1 million, or 8.80% annualized. The second quarter loan yield grew to 5.43%, representing an increase of 0.13% over the prior quarter as new loan production continued to occur at a rate higher than the existing portfolio yield. Quarterly loan production for new and renewed loans totaled $31.6 million, with a weighted average effective rate of 7.50% and a weighted-average repricing life of 4.22 years.

During the second quarter ended June 30, 2024, the bank experienced an increase in classified assets, defined as loans and loan contingent liabilities internally graded substandard or worse, impaired loans, adversely classified securities and other real estate owned, totaling $2 million. This occurred primarily due to the downgrade of one commercial and industrial lending relationship, totaling $2 million, into substandard classification. The company is a manufacturer that has been impacted by a slowdown in the RV industry but is shifting focus onto non-RV related industries while working to reduce expenses. The relationship is comprised of three loans secured by business assets and is monitored monthly. All three loans continue to pay as agreed and no losses are currently anticipated.

During the quarter, the Bank recorded a recovery of $91 thousand, attributable to a residential real estate loan which was charged off in 2011. In addition to the recovery, the Bank also recorded a $141 thousand provision for credit losses, which resulted in a quarterly increase in the allowance for credit losses of $232 thousand. The increase was primarily attributable to quarterly loan growth.

Period-end deposits totaled $677.5 million and represented quarterly contraction of $18.0 million. While the balances contracted on a quarterly basis, total deposits still reflect growth of $17.0 million since December 31, 2023. The Bank’s cost of funds experienced a small increase to 1.30%, up from 1.20% in the first quarter. The Bank is continuing to evaluate deposit pricing and will likely see quarterly increases in cost of funds based on competitive rate pressures to retain deposits.

Noninterest income totaled $2.0 million during the second quarter 2024 and represented growth of $171 thousand from first quarter 2024. The largest increase occurred in the trust fee income category, which grew $37 thousand from the prior quarter. This increase was primarily tied to growth in Assets Under Management, which increased $12.2 million as the Bank continues to onboard new trust clients. The Bank also experienced growth of $63 thousand in the other income category compared to the first quarter 2024. This growth was partially attributable to a one-time incentive payment of $34 thousand through Visa associated with our debit card processing. This payment is not anticipated to be received in future periods. During the second quarter 2024 noninterest expense totaled $6.1 million, representing a decrease of $130 thousand from the quarter ended March 31, 2024. The largest expense fluctuation occurred in the outside services category as the cost of the financial statement audit in the first quarter of $69 thousand was not repeated during the second quarter.

Forward-Looking Statement Safe Harbor

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “anticipates,” “targets,” “expects,” “estimates,” “intends,” “plans,” “goals,” “believes” and other similar expressions or future or conditional verbs such as “will,” “should,” “would” and “could.” The forward-looking statements made represent Oregon Pacific Bank’s current estimates, projections, expectations, plans or forecasts of its future results and revenues, including but not limited to statements about performance, loan or deposit growth, loan prepayments, investment purchases, investment yields, strategic focus, capital position, liquidity, credit quality, special asset liquidation, noninterest income, noninterest expense and credit quality trends. These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions that are difficult to predict and are often beyond Oregon Pacific Bank’s control. Actual outcomes and results may differ materially from those expressed in, or implied by, any of these forward-looking statements. You should not place undue reliance on any forward-looking statement and should consider all of the following uncertainties and risks. Oregon Pacific Bancorp undertakes no obligation to publicly revise or update any forward-looking statement to reflect the impact of events or circumstances that arise after the date of this release. This statement is included for the express purpose of invoking the PSLRA’s safe harbor provisions.

CONSOLIDATED BALANCE SHEETS
Unaudited (dollars in thousands)
		June 30,				March 31,				December 31,				June 30,
			2024				2024				2023				2023
ASSETS
Cash and due from banks		$	6,505			$	10,464			$	8,106			$	10,951
Interest bearing deposits			10,559				25,851				6,246				22,967
Securities			162,483				170,740				177,599				181,530
Loans, net of deferred fees and costs			563,002				550,945				536,662				510,264
Allowance for credit losses			(7,250	)			(7,018	)			(6,975	)			(6,887	)
Premises and equipment, net			13,403				13,346				13,470				11,708
Bank owned life insurance			9,002				8,933				8,866				8,738
Deferred tax asset			5,784				5,742				5,758				5,978
Other assets			8,354				8,432				11,254				7,555
Total assets		$	771,842			$	787,435			$	760,986			$	752,804
LIABILITIES
Deposits
Demand - non-interest bearing		$	154,226			$	155,038			$	155,693			$	159,184
Demand - interest bearing			285,802				297,288				272,968				265,550
Money market			119,863				129,154				129,543				152,046
Savings			64,458				63,230				66,254				75,196
Certificates of deposit			53,126				50,735				35,991				25,696
Total deposits			677,475				695,445				660,449				677,672
FHLB borrowings			7,500				7,500				17,000				-
Junior subordinated debenture			4,124				4,124				4,124				4,124
Subordinated debenture			14,777				14,752				14,727				14,677
Other liabilities			8,101				7,611				8,304				6,482
Total liabilities			711,977				729,432				704,604				702,955
STOCKHOLDERS' EQUITY
Common stock			21,388				21,280				21,291				21,135
Retained earnings			47,538				45,672				44,083				39,516
Accumulated other comprehensive income, net of tax			(9,061	)			(8,949	)			(8,992	)			(10,802	)
Total stockholders' equity			59,865				58,003				56,382				49,849
Total liabilities & stockholders' equity		$	771,842			$	787,435			$	760,986			$	752,804

CONSOLIDATED STATEMENTS OF INCOME
Unaudited (dollars in thousands, except per share data)
		THREE MONTHS ENDED													SIX MONTHS ENDED
		June 30,			March 31,					June 30,					June 30,				June 30,
			2024				2024				2023					2024				2023
INTEREST INCOME
Loans		$	7,548			$	7,143			$	6,249				$	14,691			$	12,073
Securities			1,515				1,539				1,641					3,054				3,328
Other interest income			224				198				316					422				717
Total interest income			9,287				8,880				8,206					18,167				16,118
INTEREST EXPENSE
Deposits			2,214				1,999				1,311					4,213				2,169
Borrowed funds			335				372				229					707				455
Total interest expense			2,549				2,371				1,540					4,920				2,624
NET INTEREST INCOME			6,738				6,509				6,666					13,247				13,494
Provision (credit) for credit losses on loans			141				40				121					181				70
Provision (credit) for unfunded commitments			10				(40	)			(107	)				(30	)			(107	)
Net interest income after provision (credit) for credit losses			6,587				6,509				6,652					13,096				13,531
NONINTEREST INCOME
Trust fee income			937				900				943					1,837				1,827
Service charges			361				347				342					708				667
Mortgage loan sales			61				32				28					93				66
Merchant card services			125				112				122					237				225
Oregon Pacific Wealth Management income			316				301				275					617				527
Other income			160				97				82					257				181
Total noninterest income			1,960				1,789				1,792					3,749				3,493
NONINTEREST EXPENSE
Salaries and employee benefits			3,634				3,633				3,082					7,267				6,211
Outside services			639				718				588					1,357				1,140
Occupancy & equipment			478				510				451					988				899
Trust expense			635				617				533					1,252				1,014
Loan and collection, OREO expense			20				14				27					34				51
Advertising			96				55				145					151				247
Supplies and postage			68				79				79					147				167
Other operating expenses			516				590				537					1,106				1,026
Total noninterest expense			6,086				6,216				5,442					12,302				10,755
Income before taxes			2,461				2,082				3,002					4,543				6,269
Provision for income taxes			595				492				771					1,087				1,605
NET INCOME		$	1,866			$	1,590			$	2,231				$	3,456			$	4,664

Quarterly Highlights
	2nd Quarter				1st Quarter				4th Quarter				3rd Quarter				2nd Quarter
		2024				2024				2023				2023				2023
Earnings
Interest income	$	9,287			$	8,880			$	8,651			$	8,528			$	8,206
Interest expense		2,549				2,371				2,056				1,714				1,540
Net interest income	$	6,738			$	6,509			$	6,595			$	6,814			$	6,666
Provision (credit) for credit losses on loans		141				40				80				-				121
Provision (credit) for unfunded commitments		10				(40	)			(150	)			(123	)			(107	)
Noninterest income		1,960				1,789				1,857				1,805				1,792
Noninterest expense		6,086				6,216				5,683				5,575				5,442
Provision for income taxes		595				492				614				820				771
Net income	$	1,866			$	1,590			$	2,225			$	2,347			$	2,231
Average shares outstanding		7,135,227				7,115,125				7,094,180				7,094,180				7,097,866
Average diluted shares outstanding		7,154,631				7,128,148				7,100,680				7,100,680				7,104,366
Period end shares outstanding		7,135,227				7,135,615				7,094,180				7,094,180				7,094,562
Period end diluted shares outstanding		7,154,631				7,155,019				7,100,680				7,100,680				7,101,062
Earnings per share	$	0.26			$	0.22			$	0.31			$	0.33			$	0.31
Diluted earnings per share	$	0.26			$	0.22			$	0.31			$	0.33			$	0.31
Performance Ratios
Return on average assets		0.96	%			0.83	%			1.17	%			1.22	%			1.19	%
Return on average equity		13.01	%			11.43	%			17.45	%			18.65	%			18.12	%
Net interest margin - tax equivalent		3.65	%			3.59	%			3.64	%			3.74	%			3.72	%
Yield on loans		5.43	%			5.30	%			5.15	%			5.07	%			4.96	%
Yield on securities		3.62	%			3.54	%			3.53	%			3.43	%			3.37	%
Cost of deposits		1.30	%			1.20	%			1.00	%			0.86	%			0.78	%
Cost of interest-bearing liabilities		1.83	%			1.74	%			1.52	%			1.26	%			1.15	%
Efficiency ratio		70.00	%			74.91	%			67.25	%			64.73	%			64.34	%
Full-time equivalent employees		143				142				134				131				128
Capital
Tier 1 capital	$	85,416			$	83,699			$	82,278			$	80,082			$	77,917
Leverage ratio		10.82	%			10.78	%			10.70	%			10.40	%			10.24	%
Common equity tier 1 ratio		14.36	%			14.33	%			14.28	%			14.34	%			14.18	%
Tier 1 risk based ratio		14.36	%			14.33	%			14.28	%			14.34	%			14.18	%
Total risk based ratio		15.61	%			15.58	%			15.53	%			15.59	%			15.43	%
Book value per share	$	8.39			$	8.13			$	7.95			$	7.13			$	7.03

Quarterly Highlights
	2nd Quarter				1st Quarter				4th Quarter				3rd Quarter				2nd Quarter
		2024				2024				2023				2023				2023
Asset quality
Allowance for credit losses (ACL)	$	7,250			$	7,018			$	6,975			$	6,892			$	6,887
Nonperforming loans (NPLs)	$	275			$	113			$	443			$	456			$	178
Nonperforming assets (NPAs)	$	275			$	113			$	443			$	456			$	178
Classified Assets (1)	$	11,778			$	9,668			$	9,186			$	4,252			$	3,750
Net loan charge offs (recoveries)	$	(91	)		$	(3	)		$	(3	)		$	(6	)		$	(3	)
ACL as a percentage of net loans		1.29	%			1.27	%			1.30	%			1.31	%			1.35	%
ACL as a percentage of NPLs		2636.36	%			6210.62	%			1574.49	%			1511.40	%			3869.10	%
Net charge offs (recoveries) to average loans		-0.02	%			0.00	%			0.00	%			0.00	%			0.00	%
Net NPLs as a percentage of total loans		0.05	%			0.02	%			0.08	%			0.09	%			0.03	%
Nonperforming assets as a percentage of total assets		0.04	%			0.01	%			0.06	%			0.06	%			0.02	%
Classified Asset Ratio (2)		12.63	%			10.66	%			10.29	%			4.89	%			4.42	%
Past due as a percentage of total loans		0.19	%			0.29	%			0.15	%			0.12	%			0.12	%
Off-balance sheet figures
Unused credit commitments	$	97,763			$	99,498			$	105,900			$	103,163			$	97,111
Trust assets under management (AUM)	$	254,380			$	242,222			$	226,695			$	219,268			$	222,880
Oregon Pacific Wealth Management AUM	$	159,201			$	153,228			$	147,159			$	140,153			$	141,990
End of period balances
Total securities	$	162,483			$	170,740			$	177,599			$	176,593			$	181,530
Total short term deposits	$	10,559			$	25,851			$	6,246			$	11,216			$	22,967
Total loans net of allowance	$	555,752			$	543,927			$	529,687			$	518,339			$	503,377
Total earning assets	$	737,936			$	749,463			$	722,855			$	715,273			$	716,793
Total assets	$	771,842			$	787,435			$	760,986			$	752,488			$	752,804
Total noninterest bearing deposits	$	154,226			$	155,038			$	155,693			$	160,272			$	159,184
Total deposits	$	677,475			$	695,445			$	660,449			$	669,917			$	677,672
Average balances
Total securities	$	166,077			$	172,769			$	176,066			$	180,344			$	190,818
Total short term deposits	$	16,430			$	14,663			$	12,637			$	27,510			$	24,616
Total loans net of allowance	$	552,490			$	535,251			$	522,432			$	508,385			$	498,069
Total earning assets	$	744,050			$	731,735			$	720,383			$	725,179			$	722,420
Total assets	$	780,003			$	767,409			$	756,740			$	759,592			$	751,845
Total noninterest bearing deposits	$	156,858			$	156,513			$	156,729			$	163,669			$	154,949
Total deposits	$	685,983			$	672,409			$	668,296			$	681,749			$	675,954

(1) Classified assets is defined as the sum of all loan-related contingent liabilities and loans internally graded substandard or worse, impaired loans (net of government guarantees), adversely classified securities, and other real estate owned.

(2) Classified asset ratio is defined as the sum of all loan-related contingent liabilities and loans internally graded substandard or worse, impaired loans (net of government guarantees), adversely classified securities, and other real estate owned, divided by bank Tier 1 capital, plus the allowance for credit losses.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240718981482/en/

Editorial Contact:

Ron Green, President & Chief Executive Officer

ron.green@opbc.com

(541) 902-9800

Source: Oregon Pacific Bancorp

FAQ

What was Oregon Pacific Bancorp's (ORPB) net income for Q2 2024?

Oregon Pacific Bancorp (ORPB) reported a net income of $1.9 million, or $0.26 per diluted share, for Q2 2024.

How much did ORPB's loan portfolio grow in Q2 2024?

ORPB's loan portfolio grew by $12.1 million in Q2 2024, representing an 8.80% annualized growth rate.

What was ORPB's net interest margin in Q2 2024?

ORPB's net interest margin expanded to 3.65% in Q2 2024, up from 3.59% in Q1 2024.

How did ORPB's deposits change in Q2 2024?

ORPB's deposits totaled $677.5 million at the end of Q2 2024, representing a quarterly contraction of $18.0 million.

What was ORPB's noninterest income for Q2 2024?

ORPB's noninterest income totaled $2.0 million in Q2 2024, representing growth of $171,000 from Q1 2024.